68 P.2d 23 | Colo. | 1937
THE Pueblo Masonic Building Association herein designated as the association, or plaintiff, brought an action in the district court against J. E. Creel in his capacity as county treasurer of Pueblo county, herein mentioned as defendant, seeking to enjoin him from selling certain property of the association for nonpayment of taxes, and to remove the same from the tax roll as exempt from taxation. To reverse a judgment for plaintiff granting the relief prayed defendant prosecutes this writ of error.
All of the facts were presented by stipulation from which the following appears: That the association is a purely charitable organization; that it owns a five story office building, with full basement located on the main business street in the heart of the business district of Pueblo; that the ground floor and basement are rented for store purposes; that the second floor is rented to the public generally and occupied as offices; that the third floor is rented for a business college; that on the fourth floor is a room used as a dining room by the various Masonic organizations interested in the association, and the offices of the secretary of the association also are located on this floor; that the fifth floor is used for lodge room purposes; that all net revenues so far derived have been applied to the retiring of preferred stock of the association sold to finance the purchase of the building; and that all such revenues, when the building is paid for, *283 will be used by the various Masonic bodies interested in the association for their maintenance and for charitable objects and purposes.
Briefly stated, the situation presents the question whether an admittedly charitable organization deriving revenue, not merely incidental to the use and management of property otherwise used for its charitable purposes, but from property used for the sole purpose of producing revenue to be used in carrying out such purposes, is entitled to have property so used exempted from taxation.
[1] The answer must be found in our constitutional and statutory provisions with reference to exemptions, and since both parties to the action vigorously maintain that the principles announced in opinions of this court in decided cases are determinative of the issues herein presented, in their favor, it is proper that such opinions be reviewed in order that the principles on which they rest may be specifically and clearly announced and the present case included within, or excluded from, the established rules.
The pertinent constitutional provision is section 5 of article X of the Constitution which is as follows: "Lots, with the buildings thereon, if said buildings are used solely and exclusively for religious worship, for schools, or for strictly charitable purposes, also cemeteries not used or held for private or corporate profit, shall be exempt from taxation, unless otherwise provided by general law." The statutory provision enacted pursuant thereto is section 7198, C. L. 1921, which reads: "The following classes of property shall be exempt from general taxation, to-wit: * * * Fourth. Lots with the buildings thereon, if said buildings are used for strictly charitable purposes."
The question as here presented has never been before the court and has never been determined. Seventeen Colorado decisions are cited in the briefs of counsel for the respective parties, some of which are readily distinguished as having no application to the case at bar; *284 others require a critical analysis to disclose their inapplicability.
Among those readily distinguishable are County Commissionersv. Colorado Seminary,
Pitcher v. Miss Wolcott School Ass'n,
In the case of City and County of Denver v. Gunter,
In Denver Turnverein v. McGlone,
Our court, in the case of Commissioners v. D. R. G.Ass'n,
El Jebel Shrine Ass'n v. McGlone,
In Horton v. Fountain Valley School,
The cases that require closer scrutiny and yet are distinguishable from the case at bar are Bishop and Chapterv. Treasurer of Arapahoe Co.,
The case of Bishop and Chapter v. Treasurer, supra, known as the Matthews Hall case, involved a situation in which a building and lots had been donated for a theological school on condition that the bishop of the Diocese should be the chief instructor and reside in the building. Such a school was conducted with half a dozen students and the Bishop and his family used the buildings as a residence. The students attended, lectures were delivered and instruction given there. None of the *288 instructors were paid and the Bishop devoted a considerable part of his time to his duties as bishop of the diocese. The property was held to be exempt. In that opinion the court said: "So that a use incident to the main purpose for which the property is held is not one which falls within the prohibitions contemplated by the law. Tested by these considerations, the occupation of the premises by the bishop and his family does not render the property subject to taxation. He is there as an instructor; a school cannot be conducted without teachers; and the mere fact that the bishop resides on the premises with his family is but an incident to the main purpose which requires his presence. * * * He may devote a part of his time to the discharge of his duties as bishop, but it does not appear that in so doing the property is in the slightest degree alienated from its use as a theological school. Neither does it appear that thereby he is in any manner abusing the privileges conferred by the law, or attempting to shield the property from the payment of taxes by asserting a use which is not bona fide. Incidentally, he may derive some benefit from occupying the premises; so with any other instructor; but where, as in this instance, the chief use of the hall is for educational purposes, the discharge of his duties as bishop — closely allied as they are with his duties as instructor, not interfering with the use of the premises as a school — does not render the property subject to taxation. * * * In determining these questions it must be borne in mind that whether in any given case property is or is not exempt, must be determined by considering all of the facts and circumstances, and the intentions and purposes of those in charge of the institution to which the property belongs respecting the use and occupation of such property."
Horton v. Colorado Springs Society, supra, involved a situation in which a building held for the use of several Masonic bodies contained a club room, a ballroom and dining room, and a news and cigar stand in the club room maintained for the convenience of the members, but which *289 had never paid any revenue. The ballroom and dining room were sometimes permitted to be used for social functions which nonmembers attended. Again the court applied the rule announced in the Matthews Hall case, holding that such use was merely incidental to the principal objectives of the society and that it did not deprive an otherwise charitable organization of its right of exemption.
Board of Commissioners v. San Luis Valley MasonicAss'n, supra, known as the Masonic Park case was based on the following facts: A number of associated lodges owned a quarter section of land on which they maintained an "association building," a "caretakers house," and another building known as the "Order of the Eastern Star building." Leasehold interests for certain lots were sold for $25 each to individual Masons entitling them to build summer cottages on the lots. Such improvements were the property of the individual members. Monies received from such leasehold interests were used for Masonic purposes. The grounds and buildings were used exclusively as a fraternal, pleasure, recreation and health resort for Masons and their families from any part of the world. The court held that the use was a charitable use and that the mere incident of selling some leasehold interests in lots was not sufficient to take from the property its exempt character. The rule again applied was that mere incidental income from property clearly not maintained for the principal objective of producing income did not take it out of the exempt class.
Kemp v. Pillar of Fire, supra, is strongly relied upon as authority supporting the association's contention in the present case. There a partially self-sustaining religious school with a forty acre campus, admittedly exempt, owned two hundred acres of land nearby utilized for raising fruit and vegetables used by the students and instructors of the school, and feed and grain for chickens and animals also kept for the use of the school. A part of the land was leased to tenants for a small cash rental, *290 and a small amount of surplus produce was sold, the proceeds of which were used for purposes of the school. There were 73 students, but of these only 12 paid a small portion of their board and tuition. This case leans in the direction in which plaintiffs ask us to go in holding its property exempt, but we think not so far as necessary to sustain plaintiff's position. In this case the court said: "The entire property constitutes a unit. It isreasonably necessary to effect the objects of the institution, and it is used solely for that purpose." (Italics ours.) In this case and in the later case of ColoradoTax Commission v. Denver Bible Institute, supra, in which the facts were similar, but did not involve the renting of any part of the land or the sale of any produce from it, the court in effect held that what is an incidental use depends on the particular facts and circumstances of each case. We think that such is the only safe rule to follow, and it was stated in the Matthews Hall case in these words: "So that a use incident to the main purpose for which the property is held is not one which falls within the prohibitions contemplated by the law."
[2, 3] Many situations arise in the law in which a flexible standard must be adopted. A familiar instance is found in negligence cases. Ordinary care under any given circumstances is measured by a flexible standard. It is assumed to be such action or nonaction as the particular circumstances would call forth from an hypothetical person possessing the intelligence common to the generality of mankind to foresee the consequences of action or inaction under the circumstances, and the normal desire of the generality of mankind not to suffer injury to themselves or to inflict injury upon others. Many cases are presented in which the circumstances and what was or was not done so clearly appeared, that the courts had to say as a matter of law that the acts or omissions did or did not constitute negligence. Similar situations will be presented when the question of what is or is not an incidental use arises in connection with *291 exemption claims. In the instant case the situation is presented of a five-story building, three floors of which are used for rental purposes and which are not directly or even indirectly used by the association for any other purpose than that of producing revenue, the same purpose for which buildings are owned and maintained by private persons and corporations. We think it so clearly appears that such does not present a case of mere incidental use or incidental income from the property otherwise "reasonably necessary to effect the objects of the institution" — to use again the words of the court in the Pillar of Fire case — as to require us to so find as a matter of law. Unquestionably borderline cases like the Pillar of Fire case, in which the judgment was affirmed, will arise and call for the determination by a fact finding tribunal of the question of whether the use and income derived is merely incidental to the otherwise reasonably necessary use of the property in carrying into effect the objectives of the charitable or educational institution concerned. The case before us is not of such character.
Since the claim is for an exemption from taxation of the entire building, we do not consider or pass upon the suggestion of counsel for plaintiff in error that there may be a separate valuation and assessment of that part used for revenue producing purposes. We reserve that question for determination when and if it shall arise in litigation before us.
The judgment is reversed. *292